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ZEAL Network SE has begun the new financial period with a significant growth spurt. In the first quarter 2024, revenue from lotteries increased by 22% on EUR 246.3 millions. Revenues for the group increased by 35.0%, to EUR 36.1 million (in 2023: EUR 26.7 million). EBITDA increased by 1% at the Group level to EUR 9,4 million, due to one-offs and the nearly doubling of marketing costs compared to last year.
“We had a strong start in 2024, and we were able significantly accelerate our revenue growth. This was especially true for our core business lottery brokerage. We are proud to have achieved EBITDA in the last quarter that was slightly higher than the previous year despite almost doubling of marketing costs and a negative effect due to a large win in our charity lotterie Deutsche Traumhauslotterie, amounting to EUR 0.80 million. It shows that the measures we have taken to attract new customers are working and that income is being generated across our entire customer base,” said Sebastian Bielski CFO at ZEAL. With the squeeze-out announced at LOTTO24 we also put ZEAL in a better position for the future, and are leveraging additional efficiency potential .”
Increase in revenue from core business by 28 percent
The significant revenue growth of ZEAL in the first quarter was primarily due the performance of its lottery business. Billings grew by 22%, to EUR 246.3 Million. Revenue from lotteries grew by up to 28%, to EUR 32.0 million (in 2023: EUR 25.9 million). The billings growth is due primarily to the 21% rise in average monthly active customers (MAU). ZEAL also improved the gross margin of the lottery business from 12.4% to 13.0% in 2023, thanks to a new product mix and margin optimizations. If the one-time effect of the distribution of the major prize in the charity lottery Deutsche Traumhauslotterie had not occurred, the gross profit would have reached 13.3 %.
Significant revenue growth in the Games Business compared to Q4 of 2023
In the first quarter of this year, the games business, launched last year as well, has also shown a very positive development. ZEAL increased revenue from games from EUR 1.8 to EUR 2.2 millions, a 20% increase compared to the fourth quarter last year. The gross margin was the same as the previous quarters at 7.0%.
ZEAL also expanded its game portfolio at the end quarter. The subsidiary LOTTO24 AG was granted permission to provide 64 additional games.
Stable results thanks to expansion of future earning base
ZEAL has invested heavily in its future growth over the last quarter. It acquired more than twice the number of new customers (320 000) as it did in the same time period in 2023 (2023: 143000). This customer growth was achieved much more efficiently by the company than during the same period last year. The acquisition costs per new customer registered (cost per lead or CPL) in 2023 were EUR 36.77. This was a significant decrease. The company made a strategic decision in January 2024 to take advantage of the exceptional jackpot situation to grow new customers. Marketing expenses were EUR 13,4 million, 91% more than the same period in the previous year. Other operating expenses increased to EUR 21.0 Million (2023: EUR 12.5). The direct costs of operations increased to EUR 4 million as a result. In 2023, they were EUR 2.7.
EBITDA, at EUR 9.4 millions, was slightly higher than the first quarter in 2023 (EUR 9.3 million). EBIT, at EUR 7.5 millions, was 6% more than the same period in the previous year (EUR 7.1 million in 2023), due to lower depreciation. The net income for the period increased to EUR 21 million (2023 EUR 4.7 millions) as a result of the first recognition of tax benefits expected from the use of existing tax losses carryforwards in relation to the LOTTO24 squeeze out.
ZEAL confirms its forecast from March 20th, 2024 due to the positive results in the first quarter.
